CONFLICT OF INTEREST

COUNTY COMMISSIONER OWNER OF HARDWARE STORE
SELLING TO COUNTY

To: Name withheld at person's request (Levy County)

SUMMARY:

A prohibited conflict of interest would be created under Sections 112.313(3) and 112.313(7)(a), Florida Statutes, were a hardware store owned by a county commissioner to sell goods to the county. However, if the county purchases goods from the commissioner's hardware store on a rotating basis from all qualified suppliers in the county, the exemption provided in Section 112.313(12)(a), Florida Statutes, would apply and the transaction(s) would not be prohibited. CEO 89-64, CEO 11-9, CEO 12-13, CEO 01-15, and CEO 19-10 are referenced.¹

QUESTION:

Would a prohibited conflict of interest be created were you, a county commissioner, to own a hardware store which sells goods to the county?

Under the circumstances presented, this question is answered in the affirmative except under the conditions set forth below.

In your letter of inquiry and supplemental information provided to our staff, you advise that you serve as a member of the Levy County Commission. You state that you were elected to the County Commission in 2012 and were re-elected in 2016. You state that in your private capacity you have been employed with the Ace Hardware located in Bronson since June 1995. In January 2020, you relate, you purchased the Bronson Ace Hardware and became one hundred percent owner thereof. You state that the Bronson Ace Hardware sells goods to Levy County, via County employees using their publicly provided purchasing cards, and that the store also maintains charge accounts with several County departments, including the Maintenance Department. You relate that the Levy County Commission approves miscellaneous purchases made by County employees and submitted to the County's Finance Department at its bi-monthly meetings and annually approves the budgets of the respective County departments. You state that there are approximately five hardware stores operating within Levy County. You advise that although these hardware stores are located in disparate portions of the County, it would be possible for the County to create and implement a list of all qualified hardware providers located within the County and rotate the County's hardware business amongst all qualified suppliers.

The Code of Ethics for Public Officers and Employees (Code of Ethics) provides in relevant part:

DOING BUSINESS WITH ONE'S AGENCY.—No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer's or employee's spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer's or employee's spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to the officer's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision or any agency thereof, if he or she is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business or when such offices are on property wholly or partially owned by the legislator. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(c) Appointment to public office.

(d) Beginning public employment. [Section 112.313(3), Florida Statutes.]

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.—No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he or she is an officer or employee . . .; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his or her private interests and the performance of his or her public duties or that would impede the full and faithful discharge of his or her public duties. [Section 112.313(7)(a), Florida Statutes.]

Section 112.313(3) contains two prohibitions, the first of which prohibits you from buying realty, goods, or services from a business of which you, your spouse, or your child is an officer, partner, director, proprietor, or the owner of a "material interest."² The second clause of Section 112.313(3) prohibits you from acting in your private capacity as a store owner to sell goods, services, or realty to your public agency or to any part of your political subdivision. Further, Section 112.313(7)(a) prohibits you from holding employment or a contractual relationship with a business entity if the business entity is subject to the regulation of, or is doing business with, your public agency.³ Absent the applicability of an exemption, the provisions of Section 112.313(3) and 112.313(7)(a), Florida Statutes, would prohibit you or your store from doing business with the County while you serve as a member of the County Commission.

However, the Code of Ethics provides certain exemptions to these prohibitions. The relevant portions of Section 112.313(12) provide:

(12) EXEMPTION.--. . . . In addition, no person shall be held in violation of subsection (3) or subsection (7) if:

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(a) Within a city or county the business is transacted under a rotation system whereby the business transactions are rotated among all qualified suppliers of the goods or services within the city or county.

Section 112.313(12)(a), Florida Statutes, provides an exemption from conflicts of interests under Sections 112.313(3) and 112.313(7)(a) when the business transactions are rotated among all qualified suppliers of the goods or services within the city or county. See CEO 89-64, CEO 11-9, and CEO 01-15. For example, in CEO 89-64, the Commission opined that if a county purchases auto parts on a rotating basis from all qualified suppliers in the county, Section 112.313(12)(a) would apply and the county's purchase of auto parts from an auto parts store owned by a county commissioner would not be prohibited. Similarly, in the instant matter, the exemption contained in Section 112.313(12)(a), Florida Statutes, would permit your business to sell to the County if the County's hardware purchases are rotated⁴ among all qualified suppliers in the County.

Accordingly, we find that a prohibited conflict of interest would be created were you or your business to sell to the County, while simultaneously serving on the County Commission, unless the business is rotated amongst all qualified suppliers within the County.⁵

ORDERED by the State of Florida Commission on Ethics meeting in public session on July 24, 2020, and RENDERED this 29th day of July, 2020.

____________________________________

Daniel Brady, Chair

^[1]Prior opinions of the Commission on Ethics can be viewed at www.ethics.state.fl.us.

^[2]A "material interest" is defined in Section 112.312(15), Florida Statutes, to mean a direct or indirect ownership of more than five percent of the total assets or capital stock of any business entity.

^[3]In advisory opinions the Commission has found that the agency of a county commissioner is the county commission and the political subdivision that is a county includes all offices and agencies of the county. See CEO 12-13 and CEO 19-10.

^[4]We caution that the rotation system implemented must constitute a good faith and fair methodology, reasonably administered, allowing for the equitable rotation of both business frequency and purchase amounts amongst all qualified suppliers of hardware goods within the County.

^[5]Further, we caution that you must comply with the requirements of Section 112.3143(3)(a), Florida Statutes (the voting conflicts law), and satisfy all procedures set forth in CE Form 8B, regarding any Levy County Commission votes/measures pertaining to, authorizing, or implementing the hardware store rotation system as such measures would inure to your special private gain or loss. See CEO 11-9, Question 2.